COVELONG BEACH HOTELS (INDIA) LIMITED Vs. STATE

JUDGEMENT

(1.) THE petitioner in C.P.No.19 of 2002 Covelong Beach Hotels (India) Limited is the Transferor Company and the petitioner in C.P.No.20 of 2002 Oriental Hotels Limited is the Transferee Company.

(2.) THE Transferor Company was incorporated on 15.12.1972 under the provisions of the Companies Act, 1956 and has its registered office at Chennai. The Authorised Capital of the Transferor Company is Rs.15,00,00,000/ -, consisting of 10,000 -11% Redeemable Cumulative Preference Shares of Rs.100/ - each and Rs.14,90,00,000/ - consisting of 1,49,00,000 equity shares of Rs.10/ - each. The issued capital is Rs.4,60,11,990/ - consisting of 46,01,199 equity shares of Rs.100/ - each. The subscribed and paid -up capital of the Company is Rs.4,59,53,240/ - consisting of 45,95,324 equity shares of Rs.10/ - each fully paid -up. The object of the transferor company is to carry on the business of hotels, restaurants, cafes, taverns, refreshment rooms, boarding and lodging.

(3.) THE above petitions have been filed for sanction of the proposed scheme of amalgamation of the transferor company with the transferee company. The objects of the transferor company and the transferee company are similar and a scheme of amalgamation was proposed for the transfer of assets and liabilities of the transferor company to the transferee so that the transferee company would be a company with a much larger asset base with strong financials which would enable higher earnings and also enhancement of intrinsic value of shareholding. The salient features of the scheme of amalgamation are that the appointed date is defined to mean 1st April, 2001. The scheme provides for transfer of all the assets and liabilities of the transferor company to the transferee company. The scheme contains usual clauses for continuation of legal proceedings and transfer of contractual obligations of the transferor company to the transferee. The scheme further provides that all employees of the transferor company in service on the effective date shall become the employees of the transferee company on such date without any break or interruption in service and on the same terms and conditions and the transferee company shall not vary the terms and conditions. The scheme provides that in consideration of the transfer and vesting of the undertaking and the liabilities of the transferor company in the transferee company, the transferee company is required to issue and allot to the equity shareholders of the transferor company equity shares of Rs.10/ - each in the ratio of 2 (two) equity shares of the face value of Rs.10/ - each in the transferee company for every 5 (five) equity shares of the face value of Rs.10/ - each in the transferor company.